April 21, 2009

Defining Innovation

It seems for many something as simple as defining innovation can be a challenge. Of course, it’s not that surprising. Innovation is one of those words that are plagued with a surfeit of meanings. With a quick look at Merriam-Webster On-line, we find:

These are the common definitions, but in circles of innovation practice, these common definitions don’t capture the meaning of the concept very well. For this reason, we choose to apply different, more refined definitions to the term in an attempt to capture the nuance of what innovation means in an organizational setting. However, the echoes of the common vernacular continue to haunt our discussion as people trying to get their arms around the subject struggle with the distinctions between creativity, invention, and innovation.

Ask ten people to define innovation, and you are likely to get at least a dozen answers. However, I’ll put forth a single answer to the question.

Innovation is the process through which value is created and delivered to a community of users in the form of a new solution. Here we have chosen to frame the definition of innovation as a word describing a process. It can also be used to describe a new product or service, which is the outcome of the innovation process, that delivers value to a community. In either case, the key elements of the definition are newness and value delivery.

Creativity, by contrast, is the ability to imagine new concepts. While we won’t discuss what it means to imagine new concepts here, it is important to note that creativity does not carry the burden of value creation that innovation does. This is one of the reasons that in brainstorming sessions it is not recommended that concepts are screened for merit. This allows the brainstorm practitioner the fanciful luxury of proclaiming success in generating many creative concepts even when the result is devoid of value.

Invention is also distinct from innovation. The distinction here rests on a fine point. If you think about the three attributes that an invention must possess to be patentable – novelty, non-obviousness, utility – there are two key distinctions between inventions and innovations. One is that innovations are not required to be non-obvious. As all innovations build on the past, it is possible for an innovation to be obvious. (Though the value of an innovation is usual inversely proportional to its obviousness.) More importantly, innovations and inventions have a potential distinction in the area of utility. Inventions need only be useful to the inventor and have recognizable utility to the patent examiner. Innovations must answer to a higher authority. Innovations must be deemed useful by the intended audience of use. That is to say, an invention is an invention by virtue of its existence. However, an innovation must be adopted in practice by the intended user community to be considered a true innovation.

In general, the definitions given here have served me well and have been well received by other leading innovation practitioners. Now, it may seem odd that while innovation in business is mostly where I focus and business is all about money, I have left mention of money out of the definition entirely. There are two reasons for this. First of all, for-profit business is not the sole domain of innovation. Innovation is ubiquitous in its reach and can be used to serve a multitude of purposes. More importantly while it is true that the end objective is generation of money in the realm of for-profit business, the primary value delivery of innovation is to the adopting users, not the business. It is business of business to figure out how to convert value delivered via innovation to users into revenue and profits. (Of course, a well developed high-performance innovation program understands this and integrates the business strategy with the innovation strategy from the start.)

One other point to remember is that innovations can be either outward facing or inward facing. An outward facing innovation is one that targets an end-user audience. An inward facing innovation may address in internal audience such as a manufacturing group where a new method of manufacturing may create a competitive edge.

The funny thing about definitions like this one is that while they are useful, they are not nearly important as the effect of innovation. It is important to members of an organization that innovation is a tool to be used to create corporate value by delivering monetizable value to customers. Companies that master this practice in a sustainable manner will outperform their peer group competitors.

But if you aren’t implementing high-performance innovation as an engine of sustainable growth already, it’s time to stop worrying about the precision of the definition and start worrying about who’s going to eat your lunch. Innovation isn’t about talking, it’s about doing. So, get cracking, and begin your journey from accidental innovator to high-performance innovation leader.